Trade ideas

EUR/USD fell on Tuesday reaching our targets and going even lower touching support at $1.3320. The level of $1.3295 (Nov. low) now seems as close as ever. The pair should find some initial support at this point. The close below $1.3340 will strengthen the case for a slump to $1.3230 (50% Fibo of the advance in 2013-2014). The market’s clearly in favor of the greenback, but the main risk is the release of the FOMC minutes tomorrow which may leave USD bulls disappointed. Resistance is at $1.3370 and $1.3400.

GBP/USD was a trade of the day. Lower inflation figures provoked a selloff and the closing of the week’s opening gap. The Bank of England’s head Mark Carney has made some hawkish comments over the weekend, but to really believe in an earlier rates hike investors need confirmation of the hawkish mood from the BoE minutes, especially taking into account the inflation slowdown. Pound’s now at the 23.6% Fibo of the advance since 2013 and the lower daily Bollinger band. There’s a bullish divergence on H4 MACD and RSI – the oversold pair might be due for a correction up. However, fundamentally pound is lacking reasons to strengthen, and we don’t expect much from the minutes. Resistance lies at $1.6670 (200-day MA) and $1.6700 and this is probably as much as the bulls are going to get before the declines resume.

USD/JPY may rise to 103.00, but it doesn’t look like there’s a serious bullish momentum, so the sellers will once again get into battle selling the pair to the 200-day MA at 102.35 and probably to 102.05.

AUD/USD continued its assent as the minutes of the Reserve Bank of Australia excluded the possibility of a rate cut. Still, the bulls continue lagging strength: the 100-day MA at $0.9340 is providing a strong resistance. There may be some cautiousness ahead of the RBA’s Stevens speech, but probably the bulls’ timidity may be explained by the expectations of stronger USD. The technical picture on H4 is somewhat better than on the daily chart, but we stick to the view that $0.9355 (50% of the decline from July 23) will cap Aussie making it revisit $0.9305 and below that $0.9280.